Japanese Police Cuff Mt Gox Boss Karpeles

Japanese police arrested the boss of what was once the world’s largest Bitcoin exchange over the weekend, suspecting him of interfering with computer systems to create $1 million that wasn’t there.

Investigators led 30-year-old Mark Karpeles away from his apartment on Saturday morning local time.

A spokesperson claimed they suspect him of manipulating his account with Mt Gox in order to make it look as if an extra million had been added, according to the Wall Street Journal.

Karpeles told the paper that the allegations were “false” and that he’d deny them.

Local media has reported that the French-born former Bitcoin exchange owner may know more about the disappearance of over 800,000 Bitcoins—worth $500m in 2013—than he has let on.

That incident ultimately led to the exchange being forced to close and declare bankruptcy in February 2014, despite Karpeles finding 200,000 of the lost digital currency in a “cold wallet.”

He claimed at the time that a “transaction malleability” bug had allowed hackers to steal the virtual currency, although researchers have disputed this chain of events.

There are counter claims that Karpeles himself funneled off vast sums into his own account for trading.

His continued refusal to make public information which could help shed more light on what happened has done nothing to reassure supporters that he’s innocent.

According to Japanese law the police now have up to 23 days to formally charge the former Bitcoin exchange boss.

Security issues continue to represent a major barrier to greater Bitcoin adoption worldwide.

Kaspersky Lab revealed research at Black Hat Asia in April showing how blockchain-based crypto-currencies could be abused, for example.

And as recently as last month, UK exchange CoinCut said it was investigating a possible breach which may have exposed sensitive customer information, including passport and credit card data.

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